Property / Construction

Outsourcing becomes the in thing

In times of uncertainty, companies have turned to outsourcing to lessen the burden of fixed costs

Companies in Hong Kong have had recent first-hand experience of the effects that a crisis such as SARS can have on business. They have also seen that dramatic changes in the economic climate often have the most profound impact on organisations which have a high proportion of fixed costs. These consistently eat into revenues and hurt the bottom line. Realising this, many companies now see the sense in outsourcing certain operations, allowing them to turn fixed costs into variable costs and have tighter control over expenditure, while maintaining the same high service standards.

Outsourcing the non-core aspects of a business makes good economic sense, according to Keith Futcher, chief executive officer of ISS EastPoint Facility Services Limited. To illustrate, he explains that a bank's main business is dealing with financial transactions, but that it needs premises to operate.

Therefore, it ends up employing people to take care of those premises, although this does not add value to the business. "Instead, by outsourcing, the same tasks can be accomplished by a company that offers higher proficiency and economies of scale," he says. "Once companies start outsourcing they begin to realise the savings in their own cost structures."

Multi-service company

Recognising the opportunities presented by this trend, ISS, the world's largest integrated facility service company, repositioned itself in 2000 to expand its scope of services. As part of this strategy, it acquired EastPoint, which was the largest independent property, facility and asset management company in Hong Kong. Combining the experience of the two, the intention was to become a one-stop shop capable of offering all the services any major client might need.

"Companies hire people to do a multitude of tasks such as cleaning, security, human resources, catering, landscaping and even pest control," Dr Futcher says. "If we provide all these services, then there is only one contract and one bill. By keeping the process simple and cost effective, we are able to keep the customer happy and build long-term relationships."

Career openings

ISS EastPoint has become one of the largest private sector employers in Hong Kong with over 9,300 staff in a wide range of management and operational roles. The group also operates in 43 countries worldwide and aims to offer all employees job security and the chance of ongoing career development.

"The opportunities for vertical career progression are obvious, but there will also be chances for lateral career moves as we draw on our international network to bring new facets into our Hong Kong operations," Dr Futcher explains. "This will allow employees to do things that they never thought possible."

For example, in Europe, ISS is currently involved in railway operations. Making use of this corporate experience, the company is very interested in holding discussions with local operators in Hong Kong about providing support services, which would open up a whole new area of facility servicing.

Expanding in this way would also allow managers and staff to apply their skills on a much broader scale. "We carry out services for a large number of companies, so we are constantly developing managerial techniques and improving our managers," Dr Futcher adds.

Competition among graduates for entry positions in the facility service industry is getting tougher all the time. Candidates now realise that the pay is generally better than for an equivalent starting post in the hotel business and that the sector provides many opportunities for self-development before having to decide on an area of specialisation or a particular career path.

"Today, many people leaving university are still uncertain about their choice of career," Dr Futcher says. "If you are unsure, a great place to start is with a company that is going to develop your managerial skills from day one – a company that will expose you to a wide range of experiences."

Business evolution

Companies are turning towards outsourcing non-core operations
in order to reduce fixed costs

A one-stop shop facility service provider can offer a
better option for customers and create long-term business
relationships

A global network increases the scope of business and provides
opportunities for both vertical and lateral career progression

Young graduates can see that a career in the facility
service industry offers attractive pay and an environment
which encourages professional development